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No passenger fuel surcharge from July to Aug, orders CAB

Image by Stela Di from Pixabay

Domestic and international flights from the Philippines will not levy a passenger fuel surcharge from July to August 2020 with the continuous slide in jet fuel prices.

In an advisory dated June 15, Civil Aeronautics Board (CAB) executive director Carmelo Arcilla said jet fuel from April to May 2020 averaged below the February to March period. The latest rate falls within Level 0 of the passenger fuel surcharge matrix for domestic and international flights. Alternatively this means if the two-month price average of jet fuel per liter falls below P21, no fuel surcharge will be collected.

From April to May, jet fuel averaged US$27.3 per barrel, equivalent to P8.70 per liter at an exchange rate of $50.65 per dollar — way below the US$51.66 per barrel, equivalent to P16.51 per liter at an exchange rate of P52.82 per dollar during the February to March 2020 period.

CAB since May has not imposed a passenger fuel surcharge due to lower jet fuel price.

Airlines have suspended their commercial flights since mid-March following travel restrictions to prevent the spread of the coronavirus disease. Only repatriation and cargo flights were operational. Following easing of restrictions from the start of June, a limited number of domestic flights are now operating.

CAB Resolution No. 44 issued in September 2018 reimposes the collection of fuel surcharge from passengers on domestic and international flights. The resolution states that the applicable fuel surcharge will be determined by the two-month average of jet fuel Mean of Platts Singapore (the average of a set of Singapore-based oil product price assessments published by Platts) priced in its peso-per-liter equivalent, and fixed for two months.

The two-month price average will be the ceiling rate for the fuel surcharge.

The applicable fuel surcharge is evaluated every two months and announced 15 days prior to its effectivity, in accordance with the timetable in Resolution No. 44.

Resolution 44 notes that airline fuel surcharge is an optional fee that airlines may impose and collect to recover fuel costs and stem losses caused by a spike in fuel cost.

“Fuel surcharge is not a part of the basic airfare and may be reduced or removed depending on the price of jet fuel in the market, in accordance with prevailing international practice,” the resolution said.


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